United States

East Coast utilities look to protect interests

UNITED STATES: A new organisation that aims to prevent some of the best US wind resources in the Midwest from reaching the East Coast is among the latest threats to transmission expansion.

The innocuously named Coalition for Fair Transmission Policy (CFTP) consists mostly of eastern seaboard utilities. Major members include Consolidated Edison, DTE Energy, Alliant Energy, PPL, Southern Company, Public Service Enterprise Group (PSEG) and others.

The CFTP is lobbying congressional lawmakers to make it more difficult or impossible for the costs for transmission to be spread across wide pools of users. This summer, the Federal Energy Regulatory Commission (Ferc) took steps to improve cost allocation methods for big transmission lines. It outlined proposed rule making, which the American Wind Energy Association (AWEA) says will be helpful for wind.

Ralph Izzo, chairman, president and CEO of New Jersey-based PSEG, one of the ten largest electric utilities in the US, argues that market prices should decide which clean-energy solutions are the most effective if the US is to move to a low-carbon economy cost-effectively.

"Socialising the cost to transport clean energy from some regions will hurt clean-energy developers in other regions and will ultimately result in higher energy prices for everyone," Izzo says. "But if all developers have to include all their costs of delivering clean energy to customers, then they will seek to provide best overall value to customers."

Michael Goggin, AWEA's manager of transmission policy, does not buy this argument. "Utilities that are members of the CFTP have a strong interest in keeping the status quo of an outdated and congested grid and preventing policy changes that allow us to construct new transmission in this country that would benefit renewables, consumers and the environment," Goggin says.

The so-called socialising of transmission costs that the CFTP criticises is the very policy that has been shown to be the best way to bring more wind power and other variable generation sources online across the country.

Much as state taxes pay for state roads and federal taxes pay for national motorways, wider pools of funding support from utilities and ratepayers are needed to build transmission lines that unlock distant wind resources or to get wind-generated electricity from where it is produced to the major population centres of the congested eastern seaboard. Multiple studies have shown overall economic benefits to wider power systems with such arrangements.

The CFTP's motive, says Goggin, is driven because their member utilities own generation sources that would be disadvantaged if they faced lower-cost generation such as wind power coming into their regions. Also, many of the utilities own transmission lines and rights in highly congested areas, which makes them valuable assets. "Essentially, you have businesses that are trying to protect their profit margins at the expense of everyone else," says Goggin.

"We have seen the consequences of policies that do not support the cost of transmission to be broadly spread. The result is that you do not get new transmission built and, if you do not get it built, you are not going to be building new wind and other renewables."

Ferc is currently reviewing public and industry comments but is not expected to draft a final ruling until early next year.

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